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Post Office Limited
(company no. 2154540)
Minutes of the meeting of the Board of Directors
held at Gavrelle House, London
on 26" September 2002
Present:
Allan Leighton Chairman
David Mills Chief Executive
Peter Corbett Finance Director
Alan Barrie Director Change & IS
John Main Director Human Resources
Gordon Steele Director Customer Services
In attendance:
Graham Halliday EC Director Banking & Innovations
Richard Barker General Manager, Commercial Branches
Jonathan Evans Company, Secretary
Anna Malley Notes , if
Others attending: - see es . :
Mike.Wells ° “1S Director, for,
Keith Baines “/_ IS.Service Mai
BO2/17 I
- for POLBO2/17
Apologies: ‘ “David Miller, ‘Ch Dperating Officer *
POLB02/13 MINUTES OF PREVIOUS MEETING
The Board approved the minutes of the meeting of 25" July
2002.
POLB02/14 STATUS REPORT
The status report was noted. The Board noted further:
(c) I the Consignia Board had not provided the Post Office Limited
Board with any delegated authority over and above that
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(a)
(b)
(c)
(d)
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granted to the Chief Executive. The Board questioned this
approach, and would keep the matter under review pending
further clarification of it's powers following the restructuring of
the Consignia group. The Secretary. noted that the
Memorandum and Articles of the Company were being revised
as part of this restructuring, and these would be tabled before
the Board and at an Extraordinary General Meeting of the
Company in due course.
CHAIRMAN’S BUSINESS
The Chairman reported the following matters to the Board:
interviews had taken place with several candidates for the
position of Post Office Limited Chairman, and, for Non
Executive Directors of Consignia. Consideration was also
being given to the. appointment ofa Non Executive Director on
to the. Board of Post Office Limited. It was anticipated that
announcements would be made in the next few weeks;
discussions with Government on funding were ongoing.
Pen ng the outcome of these discussions, the Board noted
that the' Directors of Consignia plc at their. September meeting
had reviewed their funding position and had considered their :
company. to be a:going ‘concern. Accordingly, the-letter’of ~-
support'from’ Conisighia plc to’ Post-Office Limited cufreritly °° . i
continued-to:give:sufficient comfort to-satisfy the Board.that.-~ -. ’
Post-Offi imited was a going concern at'this point‘in:time;
‘a strateg ic,plan for the Royal Mail business was due to be
produced in the next few weeks. It was anticipated that this
plan may worsen the financial projections compared with the.
mails elements in the Consignia renewal plan, due to slippage
in major programmes.. It was noted that the revised Post
Office Limited plan had a requirement for increased funding
compared with the previous assumptions;
the Chairman had met the General Secretary of the National
Federation of Sub-Postmasters, who had set out his
aspirations for clarity with regard to the ongoing pay structure
for sub-postmasters. The Chairman and the Chief Executive
had agreed to conduct a special review into sub-postmasters’
pay arrangements.
CHIEF EXECUTIVE’S REPORT
The Board noted in discussion that:
Strategic Plan: the Strategic Plan had been submitted to.
Government, who had now requested various supporting
information to assist them in their review of the plan;
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Irrelevant
POLB02/1 7 . RECOMMENDATION vay
The Board noted Alan Barrie's presentation, which provided an
update on the renegotiation of the current Horizon contract
with Fujitsu. The Board:
(a) noted that a significantly improved offer had been negotiated,
which would enable the IT costs for 2002/3 to be achieved and
those planned for 2003/4 and later to be extended. The
revised arrangements would reconfigure the system so that it
more closely. represented the needs of the business, and the
simplification of the systems architecture was a key driver of
the reduced cost. The IT costs associated with the deployment
of debit cards would now be handled by Fujitsu - free of
charge;
(b) agreed that a deal should.be concluded with Fujitsu based on
the proposal in front of the Board, with a view introducing a
revised. contract by the end of December;
(c) thanked Alan Barrie and his team for their efforts throughout a
difficult set of negotiations.
POLB02/18 BUSINESS PROPOSITION
The Board noted Gordon Steele’s presentation, which set outa
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ACTION:
Gordon Steele.
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(a)
(b)
(c)
(a)
(b)
(a)
(b)
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recommended business proposition for the Company.. The
Board:
supported the general direction of the business proposition of
‘simple ways through important matters’, but identified a
number of areas where further work was required. There was
‘some lack of clarity about the purpose of the slogan
representing the proposition, and for whom it was: intended. A
more customer friendly way of expressing the proposition was
required, and the source of competitive advantage for the Post
Office needed to be better defined.. The proposition would
need to.be reflected. in the business plan and decisions would
need to be taken on what current activities would fall outside of
the proposition, and therefore be stopped;
noted the importance of the internal communications on the
proposition, given that the experience of sub-postmasters was
often one of managing complexity. The Chairman did not want
the proposition to become a mantra: it should instead unify
why people shop with, or work for, the company;
noted the intention to use external consultants in the change
process.. Some Directors registered scepticism that the
consultants would add valuecommensurate with their cost.
INTERNAL COMMUNICATIONS FEEDBACK : :
The Board noted Gordon Steele’s paper, which provided
information on the outputs:of focus groups conducted during
August, and a summary of the issues raised during the Head
Office open forum.in September. The Board noted further:
a generic theme from the feedback was a desire for more
information by our people, particularly in relation to changes in
the operation;
the feedback should be used to support further work on the
business proposition.
CHRISTMAS AND NEW YEAR ARRANGEMENTS.
The Board noted Richard Barker's report, which recommended
arrangements for balancing and opening hours for Christmas.
and New Year. The Board:
agreed the proposal that branches closed at 12.30 on 24
December 2002, and 16.00 on 31 December 2002, with
balancing to take place on 27 December 2002 and 3 January
2003;
noted that the closing arrangements were based on historical
practice, rather:than best practice of competitors. The Board
agreed that the communication advising of the closing times
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ACTION: should make it clear that offices would be expected to stay
Richard Barker/ open where there was demand, and that in future years the
John Main company would look to replicate the closing arrangements of
banks or other local retail businesses at Christmas.
POLB02/21 FINANCE FUNCTIONAL REPORT
The Board noted Peter Corbett’s report. The Board noted
further:
(a) _ the year to date loss of £93m was better than budget by £5m.
The budget in the second half of the year would be more of a
challenge to meet;
(b) debate was ongoing with Consignia over the cash flows in the
POL strategic plan, which were worse than contained in the
POL element of the renewal plan. This was not-a entirely due
to increased discretionary expenditure, as had been reported
elsewhere, but the result of a more realistic approach to
revenue projections and efficiency savings ;
(c) consideration was being given io:the ‘acceleration ofa
proposed move from Day A’to Day B funding relationship with 4
Girobank, which would '‘improve:cash‘flows; *: i
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POLB02/28 REGISTERED OFFICE OF POST OFFICE LIMITED.
The Board agreed that the Registered Office of Post Office
Limited be changed to 80-86 Old Street, London, EC1V 9NN.
POLB02/29 DATE OF NEXT BOARD. MEETING
14, November 2002 at 80-86 Old Street, London.
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